Source: The Hindu Business Line, Jul 16, 2018
New Delhi: The producer’s inflation zoomed to a 54-month high in June, Government data revealed on Monday. This inflation, popularly known as Wholesale Price Index (WPI), stood at 5.77 per cent in June as against 4.43 per cent for May.
WPI follows retail inflation (CPI), which rose to a five-month high of 5 per cent in June, while industrial production slipped to 3.2 per cent in May, Now, both key inflation indices are rising, and the possibility of the RBI’s Monetary Policy Committee considering another rate hike at its next policy meeting, is high. The committee is to meet under the Chairmanship of RBI Governor Urjit Patel early next month.
Aditi Nayar, Principal Economist at ICRA, said the lagged transmission of higher crude oil prices, an uptick in cotton prices and electricity tariffs, the hardening of inflation for manufactured products as well as an unfavourable base effect, led to a sharp pickup in WPI inflation. An unfavourable base effect as well as a revision in electricity tariffs, and prices of ATF, LPG, naphtha and furnace oil, contributed to the considerable rise in inflation for fuel and power to 16.2 per cent in June from 11.2 per cent in May. Read the rest of this entry »